They find it more at citygates rather than state borders, and the “it” is both reliability and competitive prices for wholesale natural gas supplies, according to natural gas purchasing executives who spoke last Wednesday at the “LDC Forum: Rockies and the West” conference in Los Angeles.
Noting that Southern California Edison Co. (SCE) operates a robust gas portfolio for its generation fleet, Rosalie Roth, gas strategy manager at SCE, said the large power distributor represents 17% of California’s natural gas demand and 2% of the gas demand nationally. The Edison International utility looks for financial gas deals (requests for offers, or RFOs) and physical supplies (requests for proposals, or RFP), Roth said.
Along with the emphasis on reliability and price, Northwest Natural Gas Co. gas supply director Randy Friedman said he also looks for flexibility and diversity in both supplies and their transportation to market.
No longer holding interstate capacity rights on El Paso Natural Gas Co. pipelines into Southern California, SCE now looks to the developing citygate market as a very good buying hub. “We have seven pipelines coming from three or four regions and have a lot of optionality in terms of sources of supply and price,” Roth said. “We try to stay very flexible, and we are not committed to a single path or supply basin.”
Reliability and price become even more important with the increased amount of renewable-based electric generation in the mix, said San Diego Gas and Electric’s Andy Scates, electric fuels trading manager, but the renewables aren’t necessarily changing his approach to supply contracts. The Sempra Energy combination utility is building more peaking capacity and continually shaping the utility load in response to renewables, in addition to maybe buying a little more spot market supplies.
Roth said Edison is definitely looking at more peaking plants, and this means she is looking for more short-term supply arrangements these days. “We need arrangements where we can turn the gas on or off very quickly,” she said. “We need to cover the off-peak loads because of wind and solar. That’s why we aren’t looking for contracts that are long and thick. We need things that are more flexible and reflective of our market needs.”
Peter Finie, energy resources and taxation manager at Birmingham, Alabama-based Vulcan Materials Co., a maker of aggregates, cement and ready-mix concrete has plants spread throughout much of the nation, but does not maintain any storage or transportation capacity. It buys all of its supplies,using local utilities and others to deliver to its various plants that use large amounts of gas in making asphalt.
Finie did not divulge Vulcan’s gas requirements but indicated it was large. “We buy all of our gas and then depend on smaller utilities to deliver it,” Finie said.
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